Court of Appeals Determines That Insurance Agent Lacked Legal Duty to Motorist Injured in Automobile Accident With Customer Who Sought Insurance Coverage From the Agent

Michael R. Giordano

In a case involving an unfortunate set of facts, multiple Plaintiffs were injured in a serious automobile accident and sought to impose a legal duty upon the negligent driver’s insurance agency (“Agency”). The Court of Appeals rejected that argument and found that no duty was owed by the Agency to the injured motorist.

The Agent was an independent insurance broker who was contacted by the owner of a trucking company to acquire liability insurance coverage for the trucking company. Because the trucking company needed federal operating authority, the Agency required a number of forms to be completed by the trucking company which were eventually submitted to an insurance company to procure coverage.

In 2011, one of the drivers for the trucking company was stopped at a weigh station where it was discovered that the truck was overweight and the brakes were not working properly. The driver notified the owner of the trucking company of this situation and the owner asked the driver to drive the truck along routes that would avoid weigh stations to return to its base. The driver refused and the owner of the trucking company eventually retrieved the truck and began driving it through routes to avoid the weigh stations. While driving, the owner collided with two different vehicles resulting in injuries to multiple parties, including the death of one of the vehicle occupants.

The injured victims initially filed a lawsuit against a number of parties, including the liability insurer who insured the truck involved in the accident. The insurer filed a third-party claim against the Agency alleging that misrepresentations were made that induced the insurance company to issue a policy to the trucking company. The injured parties eventually amended their complaints to include the Agency as a Defendant.

The Agency filed an initial Motion for Summary Judgment on both the third-party claim of the insurance company and the claims of the injured parties. The trial court granted the summary judgment motion as to the insurance company’s claims, but denied summary judgment on the injured parties’ claim. Later, the Agency renewed its summary judgment motion by relying upon a new Indiana Supreme Court decision that reassessed the “foreseeability of injury” component in determining the existence of a Defendant’s legal duty. See Goodwin v. Yeakle’s Sports Bar and Grill, Inc. , 62 N.E.3d 384 (Ind. 2016). Based upon this new decision, the Agency argued that as a matter of law, it owed no legal duty to the Plaintiffs as their injuries were not reasonably foreseeable to the Agency.

The Court of Appeals agreed and reversed the trial court’s denial of the Agency’s Motion for Summary Judgment. The court focused upon three factors to assess whether the Agency owed a common law duty to the injured motorist. First, the court looked at whether there was a relationship between the parties. In this case, the court found the evidence undisputed that there was no direct relationship between the Agency and the injured parties. All of the Agency’s dealings were with the trucking company and not the injured parties.

The second factor that the court looked at was whether the Agency’s actions in procuring coverage for the company were foreseeable in causing injuries to motorists. In rejecting this argument, the court stated:

The broad plaintiffs here are motorists, the defendants are an insurance agency and its agent, and the type of harm involved was a multi-vehicle collision caused by faulty brakes on a large tractor-trailer. We hold the insurance agency and its agent, who had no role whatsoever in the decision to put the vehicle on the road in its condition, could not foresee that its actions relevant to this matter, which are only answering questions regarding whether their client had insurance coverage, would result in injury to a motorist.

Id. at p. 8.

Finally, the court looked to see whether any public policy considerations could lead to the existence of a duty. In rejecting this argument, the court noted that the entity that was best suited to prevent injuries to motorists was the trucking company, and not the insurance agency who had no control over the means by which the accident occurred. Consequently, no public policy considerations supported establishing a duty.

In its decision, the court also found that there was no evidence of the Agency “assuming a duty” or that the Agency was jointly liable with the trucking company for conspiring to allow the trucking company to obtain insurance coverage.

Clearly, the attempt by the injured motorists to establish a legal duty upon the Agency, that had no role in the operations of the trucking company or operating the vehicle involved in this automobile accident, was certainly a stretch.  The Court of Appeals correctly determined that the Agency’s involvement was so far removed to support the creation of any legal duty.  Insurance agents should keep this case in mind should any attempts be made to assert a claim for unrelated motor vehicle accidents.